Hypocrisy Alert?! Expedia, a “FairSearch” Member, Marginalizes American Airlines in Its Search Results

Just like manufacturers often have complicated relationships with their retailers, airlines and travel aggregators simultaneously compete and cooperate with each other. Airlines value the extra visibility that aggregators give them, but the airlines pay for that premium; aggregators siphon traffic away from the airlines’ more lucrative direct-to-consumer sales. Airlines constantly must decide which sales approach (aggregated or direct sales) maximizes profits, which leaves aggregators with a constant risk of being disintermediated.

American Airlines’ recent decision to pull out of Orbitz instantly created a disequilibrium in the entire online travel industry. American Airlines is one of the biggest US airlines, meaning Orbitz users will notice its absence, and Orbitz is one of the biggest online travel aggregators, meaning that a potentially significant number of fliers will take their business to other Orbitz listings. Either American will have to reengage with Orbitz and other aggregators, or other airlines could pull out as well and kill off the aggregator industry. Until we reach a new equilibrium, anarchy will ensue.

American’s ticket prices are no longer displayed in Expedia’s initial search results. Consumers must click through to a separate Expedia page to get detailed information on flights and airfares. [American Airlines] is also no longer one of the first carriers to be displayed on Expedia when consumers make flight queries.

Expedia’s choice is a little unexpected because American Airlines hasn’t pulled the plug on Expedia (yet); it only pulled the plug on Expedia’s competitor Orbitz. Explaining this puzzle, Expedia released a statement saying “This has been done in light of both American Airlines’ recent decision to prevent Orbitz from selling its inventory and a possible disruption in Expedia’s ability to sell American Airlines tickets when our contract with American Airlines expires.” Retaliation, or a warning shot?

Expedia’s move raises issues I explore in my Search Engine Bias article. As a consumer, I am annoyed when a search engine has a conspicuous omission; and online, I can easily switch between online travel aggregators and conduct my search at another site that offers me more useful results. So Expedia might be hurting itself with its users by offering less value to them. Or, due to its degraded sales, American Airlines might beg Expedia to restore its visibility. It will be interesting to see who blinks first.

For the reasons I describe in my Search Engine Bias article, I have no policy problems with Expedia’s move against American Airlines. They don’t “owe” it to American Airlines to show them in the results, and there is no such thing as “correct” search results. The market will drive a resolution to the Expedia/American Airlines tiff.

However, I have a huge problem with Expedia’s apparent hypocrisy. Expedia participates in a mistitled alliance called “FairSearch.org.” This alliance started as a self-interested way for the participating companies to harass Google’s attempted acquisition of ITA, but their name and rhetoric stakes out the broader theme of search engine bias.

Wait a minute…didn’t Expedia do EXACTLY what FairSearch said it didn’t want search engines to do? Expedia appears to be engaging in “search discrimination” (a nonsensical phrase for reasons I explain in my Search Engine Bias article) by manipulating its search results to punish American Airlines, which competes with Expedia through its direct sales to consumers. Worse, I couldn’t find any on-site explanation of why Expedia was treating American Airlines’ search results differently, thus seemingly displaying its results opaquely, not transparently.

Given the rhetoric on FairSearch’s website, it looks like FairSearch should be leading a charge against Expedia for violating the alliance’s principles. Perhaps Expedia ought to drop out of FairSearch.org if it can’t abide by the group’s rules. Or perhaps FairSearch.org should drop the “fair” in its titling to make clearer that its real organizational raison d’etre is to advance the parochial interests of online travel intermediaries who are paranoid that Google will disintermediate them. Until then, Expedia’s position looks uncomfortably duplicitous.

To be clear, I understand that, unlike Google’s organic results, Expedia’s airline search is a pay-for-play search engine (although I don’t believe Expedia transparently discloses how much it gets paid, by whom and for what). For purposes of the ridiculous rhetoric from FairSearch and Expedia’s fidelity to the organization’s articulated principles, I think it’s equally (or even more) important for pay-for-play search engines not to punish their competition by downgrading search results or make sorting decisions opaquely.